This research will formulate and analyze theoretical models of the demand for and supply of mental health services that take explicit account of the extent of insurance coverage for such services, the multiplicity of types of providers, and the impact of direct government regulation on the delivery system. The theoretical model will form the basis for an empirical analysis using a short time series of cross-section observations on the 50 states. The empirical work, focused as it will be at the state level, will enable us to examine how variation in regulatory climates and insurance reimbursement provisions affects the consumer's choice of provider and extent of utilization. Using data on the insurance policies held by the state's population, we will construct measures of the reimbursement the average consumer in the state receives. We will compile measures of the regulatory environment--the presence or absence of direct recognition and mandates for minimum mental health services insurance--in each state. Since these measures of reimbursement and regulatory environment vary across states, we will be able to estimate how these differences are reflected in the delivery of mental health services. Our theoretical and empirical analysis will be focused directly on relevant state policies toward the mentel health services sector. Finally, our analytical review of the empirical literature on large insured populations will provide a new assessment of the results of the studies that have been undertaken and indications of the directions that future studies of that type ought to take.